Corn Takes a Breather After China Goes on Import Binge

By Andrew Moran February 4, 2021, 9:04 pm • Posted in Commodities

Corn futures settled the Thursday trading session lower, sliding below $5.50 per pound. Corn prices had been soaring over the last month after the agricultural commodity witnessed record exports to China. Despite concerns over supplies, investors could be taking profits now as they monitor shipments and US inventories.

March corn futures tumbled $0.0275, or 0.5%, to $5.4925 per pound at 19:54 GMT on Thursday on the Chicago Board of Trade (CBoT). Corn prices are still poised for a weekly gain of nearly 3%, raising its year-to-date rally to more than 13%.

Late last month, China acquired 230 million bushels of US corn in just four days. According to the US Department of Agriculture (USDA), export sales for delivery to China climbed to 2.108 million for the 2020-2021 marketing season. The USDA also reported that there were 132,000 metric tons of soybeans sold for delivery to China for the 2021-2022 marketing year.

Private exporters also reported massive sales of corn. The USDA noted that there were 1.7 metric tons of corn sold for delivery to China during the 2020-2021 marketing year. Another 213,600 metric tons were sold for delivery to unknown destinations in the same marketing season.

Other countries are scooping up corn for the current marketing season. The USDA confirmed that 125,730 metric tons of corn were sold to Mexico, and another 110,000 tons of corn were sold to Japan.

With reports that US production of corn slowing down and inventories combing down, why are prices taking a breather?

Bob Linneman, Kluis Advisors, wrote in a research note to clients that commodity markets are trying to digest this information.

The corn bulls got another surprise Thursday morning in the daily export sales report. In total, the daily report showed a staggering 1.9 million metric tons of corn booked to ‘China’ and ‘unknown.’ This is on top of the whopping 1.46 million metric tons announced Tuesday morning. These are some serious sales! Traders are quickly updating export models and trying to determine how upcoming USDA reports could change.

In other agricultural commodities, March wheat futures tumbled $0.125, or 1.93%, to $6.3575 per bushel. March soybean futures edged up by $0.005, or 0.04%, to $13.7175 per bushel. March coffee futures added $0.001, or 0.08%, to $1.2415 a pound.